The companies building must provide sufficient leeway in their contracts to cover general business expenses. These costs are more difficult to calculate and apportion to different customers when compared to the direct costs of materials and hand labor to complete a construction project. In general, there are three types of overheads. Direct, indirect and fixed Managing these expenses and post them in the bidding process is crucial for a company building for a profit.
Workplaces have several direct construction overhead. These include temporary offices, equipment rental, administrative salaries and profits. These overheads are necessary to complete the construction in the workplace, which needs electricity and water to complete construction outlay. These costs are transferred to the customer and should be budgeted during the bidding process.
Indirect overhead costs include items such as utilities, insurance, employment taxes and retirement plans. The construction company must pay for these items on a regular basis, whether or not the company is actually building something. When calculating a tender, the estimate should include enough money to cover these expenses for the company to be profitable. Rent, communications and equipment used by more than one job are also included in the category of indirect overheads.
Fixed overheads of the company
Fixed overheads of the company include payroll taxes, unemployment insurance, bid bonds and licensing. The amounts may vary due to fluctuations in the number of contributions and the amount of labor for a project, but must be considered in the preparation of tenders and estimates for customers.